SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

--------------------------------------------------------------------------------
                               AMENDMENT NO. 1 ON
                                   FORM 10-K/A
                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                 THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

For the fiscal year ended July 31, 2001           Commission File Number 0-12927

                         NATIONAL HOME HEALTH CARE CORP.
             (Exact name of Registrant as specified in its charter)

            Delaware                                    22-2981141
---------------------------------               --------------------------------
 (State or other jurisdiction of                    (I.R.S. Employer
incorporation or organization)                      Identification No.)

700 WHITE PLAINS ROAD, SCARSDALE, NEW YORK              10583
--------------------------------------------------------------------------------
(Address of principal executive offices)                (Zip Code)

Registrant's telephone number, including area code: 914-722-9000

Securities registered pursuant to Section 12(b) of the Act:  None

Securities  registered  pursuant to Section 12(g) of the Act: common stock,  par
value $.001 per share.

Indicate  by check  mark  whether  the  Registrant:  (1) has filed  all  reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934,  as amended,  during the  preceding 12 months (or for such shorter  period
that registrant was required to file such reports),  and (2) has been subject to
such filing requirements for the past 90 days.

             Yes    X                                No
                   ---                                   ---

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge in definitive  proxy or information  statements,
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

As of October 26, 2001,  the  aggregate  market value of the common stock of the
Registrant,  its only class of voting securities,  held by non-affiliates of the
Registrant was approximately $47,544,462, calculated on the basis of the average
closing  bid and  asked  prices of such  stock on the  National  Association  of
Securities  Dealers Automated  Quotation System on that date, as reported by the
National Association of Securities Dealers, Inc.

The number of shares outstanding of the Registrant's common stock on October 26,
2001 was 5,200,151.

Portions of the  Registrant's  Proxy  Statement  for its 2001 Annual  Meeting of
Stockholders are incorporated by reference in Part III hereof.

<PAGE>

THE SOLE PURPOSE OF THIS AMENDMENT NO. 1 IS (I) OUR AUDITORS' INCLUSION IN THEIR
REPORT OF THE LOCATION OF THEIR OFFICE THAT ISSUED THAT REPORT AND (II) OUR
FORMER AUDITORS' CLARIFICATION IN THEIR REPORT THAT THEY NO LONGER RELY ON THE
WORK OF ANY OTHER AUDITORS.  NO CHANGE OF ANY KIND HAS BEEN MADE TO THE
FINANCIAL INFORMATION PREVIOUSLY FILED.

<PAGE>


ITEM 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

          (a) The following  represents a listing of all  financial  statements,
financial statement schedules and exhibits filed as part of this Report.

          (1)  Financial  Statements  (see index to the  consolidated  financial
statements).

<PAGE>


                        National Home Health Care Corp.
                                      and Subsidiaries


================================================================================
                                               CONSOLIDATED FINANCIAL STATEMENTS
                                                       AND SUPPLEMENTAL MATERIAL
                                              YEARS ENDED JULY 31, 2001 AND 2000

<PAGE>


                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES

                                                                        CONTENTS

================================================================================

REPORT OF BDO SEIDMAN, LLP, INDEPENDENT
   CERTIFIED PUBLIC ACCOUNTANTS                                              F-3

REPORT OF HOLTZ RUBENSTEIN & Co., LLP, Independent
    Certified Public Accountants                                             F-4

CONSOLIDATED FINANCIAL STATEMENTS:
   Balance sheets                                                            F-5
   Statements of earnings                                                    F-6
   Statements of changes in stockholders' equity                             F-7
   Statements of cash flows                                                  F-8
   Summary of accounting policies                                     F-9 - F-14
   Notes to consolidated financial statements                        F-15 - F-27

SUPPLEMENTAL MATERIAL:
   Report of BDO Seidman, LLP, Independent
      Certified Public Accountants on supplemental material                 F-29
   Report of Holtz Rubenstein & Co., LLP, Independent
      Certified Public Accountants on schedule                              F-30
   Schedule II: Valuation and qualifying accounts                           F-31


                                      F-2
<PAGE>


                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES


                                                     CONSOLIDATED BALANCE SHEETS
================================================================================

INDEPENDENT AUDITORS' REPORT


Board of Directors
National Home Health Care Corp.
Scarsdale, New York

We have audited the  accompanying  consolidated  balance  sheet of National Home
Health Care Corp. and Subsidiaries as of July 31, 2001 and related  consolidated
statements of earnings,  changes in stockholders'  equity and cash flows for the
year then ended. These consolidated  financial statements are the responsibility
of the  Company's  management.  Our  responsibility  is to express an opinion on
these consolidated financial statements based on our audit.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion,  the 2001 consolidated  financial  statements  referred to above
present fairly,  in all material  respects,  the financial  position of National
Home Health Care Corp.  and  Subsidiaries  at July 31, 2001,  and the results of
their  operations  and their cash flows for the year then ended,  in  conformity
with accounting principles generally accepted in the United States of America.


/s/ BDO Seidman, LLP
Valhalla, New York
September 28, 2001


                                      F-3
<PAGE>


                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES


                                                     CONSOLIDATED BALANCE SHEETS
================================================================================

INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
National Home Health Care Corp.
Scarsdale, New York

We have audited the  accompanying  consolidated  balance sheets of National Home
Health Care Corp. and  Subsidiaries as of July 31, 2000 and 1999 and the related
consolidated  statements of earnings,  changes in stockholders'  equity and cash
flows for the two years then ended. These consolidated  financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these  consolidated  financial  statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our report dated  October 1, 1999, we expressed an  unqualified  opinion that
referred to the reliance of work  performed by other auditors as it pertained to
the Company's equity investment in SunStar Healthcare,  Inc. ("SunStar") for the
year ended July 31,  1999.  During the year  ended July 31,  1999,  the  Company
recorded a loss from equity  investee of $674,000  from  SunStar and reduced the
carrying  value of the  investment  to $0.  Subsequent  to the  issuance  of our
opinion,  and during the year ended July 31, 2000, SunStar ceased operations and
was  liquidated  and the previous  auditors did not reissue their report for the
year ended July 31, 1999. Accordingly, our present opinion on the 1999 financial
statements,  as presented  herein,  does not rely on the work performed by other
auditors.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  consolidated  financial  position  of
National  Home Health Care Corp.  and its  Subsidiaries  as of July 31, 2000 and
1999, and the consolidated  results of their  operations and their  consolidated
cash flows for the two years then ended, in conformity  with generally  accepted
accounting principles.


/s/ HOLTZ RUBENSTEIN & Co., LLP
Melville, New York
October 3, 2000


                                      F-4

<PAGE>

                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES

                                                     CONSOLIDATED BALANCE SHEETS
================================================================================

<TABLE>
<CAPTION>

 July 31,                                                                                 2001                  2000
 --------------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>                   <C>
 ASSETS
 CURRENT:
    Cash, (including cash equivalents of $7,150,000 and $2,942,000,
       respectively) (Note 8)                                                     $  9,082,000          $  4,856,000
    Investments                                                                         18,000                18,000
    Accounts receivable, less allowance for doubtful accounts of
       $865,000 and $673,000, respectively (Note 8)                                 15,983,000            15,847,000
    Prepaid expenses and other                                                       1,199,000               589,000
    Deferred income taxes (Note 7)                                                     810,000               504,000
 --------------------------------------------------------------------------------------------------------------------
               TOTAL CURRENT ASSETS                                                 27,092,000            21,814,000
 --------------------------------------------------------------------------------------------------------------------
 FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET (NOTE 1)                         939,000               760,000
 EXCESS OF COST OVER FAIR VALUE OF NET ASSETS ACQUIRED, NET (NOTE 2)                 7,166,000             6,945,000
 OTHER INTANGIBLE ASSETS, NET (NOTE 3)                                               1,817,000             1,257,000
 DEPOSITS AND OTHER ASSETS                                                             236,000               212,000
 --------------------------------------------------------------------------------------------------------------------
                                                                                   $37,250,000           $30,988,000
 ====================================================================================================================
 LIABILITIES AND STOCKHOLDERS' EQUITY
 CURRENT LIABILITIES:
    Accounts payable and accrued expenses (Note 4)                                $  3,268,000          $  2,203,000
    Estimated third-party payor settlements                                          1,090,000               132,000
    Deferred revenue                                                                   282,000                     -
    Income taxes payable                                                                26,000               167,000
 --------------------------------------------------------------------------------------------------------------------
            Total current liabilities                                                4,666,000             2,502,000
 --------------------------------------------------------------------------------------------------------------------
 COMMITMENTS AND CONTINGENCIES (NOTE 10)
 STOCKHOLDERS' EQUITY:
    Common stock, $.001 par value, shares authorized - 20,000,000;
       issued - 6,491,229 and 6,228,746, respectively                                    6,000                 6,000
    Additional paid-in capital                                                      20,306,000            18,525,000
    Retained earnings                                                               14,784,000            12,274,000
 --------------------------------------------------------------------------------------------------------------------
                                                                                    35,096,000            30,805,000
    Less treasury stock (1,310,679 and 1,276,788 shares)- at cost                    2,512,000             2,319,000
 --------------------------------------------------------------------------------------------------------------------
            TOTAL STOCKHOLDERS' EQUITY                                              32,584,000            28,486,000
 --------------------------------------------------------------------------------------------------------------------
                                                                                   $37,250,000           $30,988,000
 ====================================================================================================================

                                                             SEE  ACCOMPANYING  SUMMARY OF  ACCOUNTING  POLICIES  AND
                                                                          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

</TABLE>


                                                                F-5
<PAGE>

                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES


                                             CONSOLIDATED STATEMENTS OF EARNINGS

================================================================================

<TABLE>
<CAPTION>

 Years ended July 31,                                                  2001              2000               1999
 ----------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>               <C>              <C>
 NET PATIENT REVENUE (Note 8)                                         $74,492,000        $55,574,000      $38,518,000
 ----------------------------------------------------------------------------------------------------------------------
 OPERATING EXPENSES:
    Cost of revenue                                                    48,550,000         36,455,000       25,357,000
    General and administrative                                         17,628,000         13,537,000       10,183,000
    Amortization of intangibles                                           956,000            660,000          550,000
    Provision for doubtful accounts                                       670,000            595,000                -
 ----------------------------------------------------------------------------------------------------------------------
            TOTAL OPERATING EXPENSES                                   67,804,000         51,247,000       36,090,000
 ----------------------------------------------------------------------------------------------------------------------
            INCOME FROM OPERATIONS                                      6,688,000          4,327,000        2,428,000
 ----------------------------------------------------------------------------------------------------------------------
 OTHER INCOME (EXPENSE):
    Interest income                                                       216,000            220,000          385,000
    Gain resulting from sale of stock of equity investee
       (Note 5)                                                                 -          1,602,000                -
    Loss from equity investee (Note 5)                                          -                  -         (674,000)
 ----------------------------------------------------------------------------------------------------------------------
         TOTAL OTHER INCOME (EXPENSES)                                    216,000          1,822,000         (289,000)
 ----------------------------------------------------------------------------------------------------------------------
         INCOME BEFORE INCOME TAXES                                     6,904,000          6,149,000        2,139,000
 PROVISION FOR INCOME TAXES (NOTE 7)                                    2,704,000          2,058,000        1,001,000
 ----------------------------------------------------------------------------------------------------------------------
 NET INCOME                                                          $  4,200,000       $  4,091,000     $  1,138,000
 ======================================================================================================================
 NET INCOME PER COMMON SHARE:
    Basic                                                        $            .81  $             .78  $             .21
    Diluted                                                      $            .78  $             .77  $             .21
 WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
    Basic                                                               5,179,824          5,274,215        5,406,453
    Diluted                                                             5,351,203          5,287,345        5,461,470
 ======================================================================================================================

                                                               SEE  ACCOMPANYING  SUMMARY OF  ACCOUNTING  POLICIES  AND
                                                                            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

</TABLE>


                                                                F-6

<PAGE>

                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

================================================================================

<TABLE>
<CAPTION>

                                                    COMMON STOCK           ADDITIONAL                         TREASURY STOCK
                                               ------------------------     PAID-IN        RETAINED     -------------------------
                                                 SHARES      AMOUNT         CAPITAL        EARNINGS      SHARES         AMOUNT
 --------------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>             <C>        <C>            <C>           <C>          <C>
 Balance, July 31, 1998                         6,228,746       $6,000     $18,525,000    $7,045,000    1,028,879    $(1,295,000)
 Net income                                             -            -               -     1,138,000            -              -
 Acquisition of treasury stock                          -            -               -             -       96,057       (406,000)
 --------------------------------------------------------------------------------------------------------------------------------
 Balance, July 31, 1999                         6,228,746        6,000      18,525,000     8,183,000    1,124,936     (1,701,000)
 Net income                                             -            -               -     4,091,000            -              -
 Acquisition of treasury stock                          -            -               -             -      151,842       (618,000)
 --------------------------------------------------------------------------------------------------------------------------------
 Balance, July 31, 2000                         6,228,746        6,000      18,525,000    12,274,000    1,276,778     (2,319,000)
 Net income                                             -            -               -     4,200,000            -              -
 Stock dividend declared March 16, 2001           245,983            -       1,690,000   (1,690,000)            -              -
 Exercise of stock options                         16,500            -          69,000             -            -              -
 Tax Benefit of stock option exercise                   -            -          22,000             -            -              -
 Acquisition of treasury stock                          -            -               -             -       33,901       (193,000)
 --------------------------------------------------------------------------------------------------------------------------------
 BALANCE, JULY 31, 2001                         6,491,229       $6,000     $20,306,000   $14,784,000    1,310,679    $(2,512,000)
 ================================================================================================================================
SEE  ACCOMPANYING  SUMMARY OF  ACCOUNTING  POLICIES  AND NOTES TO FINANCIAL STATEMENTS.

</TABLE>


                                                                F-7

<PAGE>

                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES


                                           CONSOLIDATED STATEMENTS OF CASH FLOWS

================================================================================

<TABLE>
<CAPTION>

 Years ended July 31,                                                    2001              2000             1999
 ----------------------------------------------------------------------------------------------------------------------
 <S>                                                                   <C>              <C>               <C>
 CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                                         $ 4,200,000      $ 4,091,000       $ 1,138,000
 ----------------------------------------------------------------------------------------------------------------------
    Adjustments to reconcile net income to cash provided by operating
       activities:
         Depreciation and amortization                                   1,194,000          881,000           682,000
         Gain resulting from sale of equity investee stock                       -       (1,602,000)                -
         Provision for doubtful accounts, net of write-offs                192,000          281,000                 -
         Deferred income taxes                                            (306,000)         (87,000)                -
         Loss from equity investee                                               -                -           674,000
         (Gain) loss on sale of assets                                      31,000            2,000            (3,000)
         Changes in assets and liabilities:
            (Increase) decrease in assets:
               Accounts receivable                                        (328,000)      (3,099,000)       (1,400,000)
               Prepaid expenses and other                                 (634,000)        (431,000)            7,000
            (Increase) decrease in liabilities:
               Accounts payable, accrued expenses and other
                 liabilities                                             1,065,000        1,124,000           (62,000)
               Deferred revenue                                            282,000                -                 -
               Income taxes payable                                       (141,000)         277,000             8,000
               Estimated third party-payor settlements                     958,000         (132,000)         (209,000)
 ----------------------------------------------------------------------------------------------------------------------
               NET CASH PROVIDED BY OPERATING ACTIVITIES                 6,513,000        1,305,000           835,000
 ----------------------------------------------------------------------------------------------------------------------
 CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of furniture and leasehold improvements                      (470,000)        (257,000)         (195,000)
    Purchase of assets of business                                      (1,737,000)      (4,801,000)       (1,943,000)
    Purchase of Accredited Health Service, Inc., net of cash                                      -        (1,736,000)
       acquired                                                                  -
    Proceeds from sale of equity investee stock                                  -        1,602,000                 -
    Proceeds from sales of assets                                           22,000           23,000             6,000
    Proceeds of investments                                                      -          160,000           310,000
 ----------------------------------------------------------------------------------------------------------------------
               NET CASH USED IN INVESTING ACTIVITIES                    (2,185,000)      (3,273,000)       (3,558,000)
 ----------------------------------------------------------------------------------------------------------------------
 CASH FLOWS FROM FINANCING ACTIVITIES:
    Purchase of treasury stock                                            (193,000)        (618,000)         (406,000)
    Proceeds from exercise of stock options                                 69,000                -                 -
    Other                                                                   22,000                -                 -
    Repayment of notes payable                                                   -                -          (421,000)
 ----------------------------------------------------------------------------------------------------------------------
               NET CASH USED IN FINANCING ACTIVITIES                      (102,000)        (618,000)         (827,000)
 ----------------------------------------------------------------------------------------------------------------------
 Net increase (decrease) in cash and cash equivalents                    4,226,000       (2,586,000)       (3,550,000)
 Cash and cash equivalents, beginning of year                            4,856,000        7,442,000        10,992,000
 ----------------------------------------------------------------------------------------------------------------------
 Cash and cash equivalents, end of year                                $ 9,082,000      $ 4,856,000       $ 7,442,000
 ======================================================================================================================
 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: CASH PAID FOR:
       Interest                                                        $     1,000      $    16,000       $     4,000
       Income taxes                                                    $ 3,129,000      $ 1,870,000       $ 1,100,000
 ======================================================================================================================

</TABLE>

SEE  ACCOMPANYING  SUMMARY OF  ACCOUNTING  POLICIES  AND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                      F-8
<PAGE>

                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES

                                                  SUMMARY OF ACCOUNTING POLICIES

================================================================================

BUSINESS                              National   Home  Health  Care  Corp.   and
                                      Subsidiaries (the "Company") is a provider
                                      of home  health care  services,  including
                                      nursing  care,  personal  care  and  other
                                      specialized  health  services.  Due to the
                                      similarities   in   services,   management
                                      considers  their   operations  to  be  one
                                      reportable business segment.

PRINCIPLES OF                         The  consolidated   financial   statements
CONSOLIDATION                         include  the  accounts  of  National  Home
                                      Health  Care  Corp.  and its  wholly-owned
                                      subsidiaries. All significant intercompany
                                      balances   and   transactions   have  been
                                      eliminated in the  consolidated  financial
                                      statements.

REVENUE RECOGNITION  AND              Net   patient  revenue   is  reported   at
ALLOWANCE FOR DOUBTFUL                estimated   net  realizable  amounts  from
ACCOUNTS                              patients,  third-party  payors, and others
                                      for   services   rendered   and   includes
                                      estimated  retroactive revenue adjustments
                                      relating  to future  audits,  reviews  and
                                      investigations.    Estimated   retroactive
                                      adjustments are modified in future periods
                                      as  adjustments  based  on  reviews  or as
                                      years are no longer subject to reviews.  A
                                      provision   for   doubtful   accounts   is
                                      recorded    based    upon     management's
                                      evaluation of current industry conditions,
                                      historical collection experience and other
                                      relevant  factors which, in the opinion of
                                      management,    require    recognition   in
                                      estimating   the  allowance  for  doubtful
                                      accounts.

                                      Under   Medicaid,   Medicare   and   other
                                      cost-based   reimbursement  programs,  the
                                      Company   is   reimbursed   for   services
                                      rendered  to covered  program  patients as
                                      determined by reimbursement formulas. Laws
                                      and  regulations  governing these programs
                                      are  extremely   complex  and  subject  to
                                      interpretation.   As  a   result,   it  is
                                      possible  that  recorded   estimates  will
                                      change.


                                       F-9

<PAGE>

                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES

                                                  SUMMARY OF ACCOUNTING POLICIES

================================================================================

REVENUE RECOGNITION AND               Approximately  51%,  36%  and  34%  of net
ALLOWANCE FOR DOUBTFUL                patient  revenue for the fiscal  years for
ACCOUNTS (CONTINUED)                  ended  July  31,  2001,   2000  and  1999,
                                      respectively,  were derived  under federal
                                      and   state   third-party    reimbursement
                                      programs.

CASH AND CASH                         For the purposes of the statements of cash
EQUIVALENTS                           flows,  the Company  considers  all highly
                                      liquid  investment  instruments  purchased
                                      with a maturity of three months or less to
                                      be cash equivalents.

FURNITURE, EQUIPMENT                  Furniture,    equipment    and   leasehold
AND LEASEHOLD                         improvements    are    stated   at   cost.
IMPROVEMENTS                          Depreciation  is  being  provided  on  the
                                      straight-line  method  over the  estimated
                                      useful lives of the assets (generally five
                                      to ten years).  Amortization  of leasehold
                                      improvements  is  being  provided  on  the
                                      straight-line   method  over  the  various
                                      lease terms or estimated  useful lives, if
                                      shorter.

EXCESS OF COST OVER FAIR              The  excess of cost over the fair value of
VALUE OF NET ASSETS                   net assets  acquired  (goodwill)  is being
ACQUIRED                              amortized  principally over a period of 20
                                      years on a straight-line  basis.  Goodwill
                                      is evaluated  periodically and adjusted if
                                      necessary,  if  events  and  circumstances
                                      indicate that a permanent decline in value
                                      below the current  unamortized  historical
                                      cost has occurred

NET INCOME PER COMMON                 Basic  net  income  per  common  share  is
SHARE                                 computed by dividing  income  available to
                                      common       shareholders      by      the
                                      weighted-average  number of common  shares
                                      outstanding.  Diluted  earnings  per share
                                      reflect,  in  periods in which they have a
                                      dilutive  effect,  the  impact  of  common
                                      shares  issuable  upon  exercise  of stock
                                      options.


                                      F-10

<PAGE>

                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES

                                                  SUMMARY OF ACCOUNTING POLICIES

================================================================================

NET INCOME PER COMMON                 The  reconciliation  for the  years  ended
SHARE (CONTINUED)                     July  31,  2001,  2000  and  1999  are  as
                                      follows:

<TABLE>
<CAPTION>

                                      YEARS ENDED JULY 31,                          2001          2000          1999
                                      -----------------------------------------------------------------------------------
                                      <S>                                        <C>           <C>           <C>
                                      Average number of shares
                                       outstanding                               5,179,824     5,274,215     5,406,453
                                      Effect of dilutive securities
                                       - common stock options                      171,379        13,130        55,017
                                      Diluted shares outstanding                 5,351,203     5,287,345     5,461,470
                                      ===================================================================================

</TABLE>

FAIR VALUE OF FINANCIAL               The  carrying   amount   reported  in  the
INSTRUMENTS                           consolidated   balance  sheets  for  cash,
                                      accounts receivable,  accounts payable and
                                      accrued   liabilities   approximates  fair
                                      value   because   of  the   immediate   or
                                      short-term   maturity  of  the   financial
                                      instruments.

ACCOUNTING FOR STOCK                  The   Company    accounts   for   employee
OPTIONS                               stock-based   compensation  in  accordance
                                      with Accounting  Principles  Board Opinion
                                      No. 25 (APB Opinion 25),  "Accounting  for
                                      Stock Issued to Employees" using intrinsic
                                      values  with  appropriate   disclosure  in
                                      conformity   with  the  fair  value  based
                                      method in accordance with the Statement of
                                      Financial   Accounting  Standard  No.  123
                                      ("SFAS 123").

ESTIMATED THIRD-PARTY                 The amount  represents  overpayments  from
PAYOR SETTLEMENT                      third-party payors. The Company settlement
                                      anticipates  that  the  third-party  payor
                                      will  recoup  these  funds  in  subsequent
                                      periods.


                                      F-11

<PAGE>

                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES

                                                  SUMMARY OF ACCOUNTING POLICIES

================================================================================

USE OF ESTIMATES                      The preparation of financial statements in
                                      conformity    with   generally    accepted
                                      accounting  principles requires management
                                      to make  estimates  and  assumptions  that
                                      affect the reported  amounts of assets and
                                      liabilities  at the date of the  financial
                                      statements  and the  reported  amounts  of
                                      revenues and expenses during the reporting
                                      period.  Actual  results could differ from
                                      those  estimates.  Such  estimates  relate
                                      primarily to third-party payor settlements
                                      and   valuation   reserves   for  accounts
                                      receivable.

WORKER'S COMPENSATION                 The Company  self-insures  up to specified
                                      limits  certain  risks related to workers'
                                      compensation   liability.   The  estimated
                                      costs  of  existing  and  expected  future
                                      claims  under the  insurance  program  are
                                      accrued   based   upon   historical   loss
                                      development trends and may be subsequently
                                      revised based on developments  relating to
                                      such claims.

INCOME TAXES                          The Company account for income taxes under
                                      as  asset  and  liability   approach  that
                                      requires the  recognition  of deferred tax
                                      assets and  liabilities  for the  expected
                                      future  tax  consequences  of events  that
                                      have  been  recognized  in  the  Company's
                                      financial  statements or tax returns.  The
                                      effect  on   deferred   tax   assets   and
                                      liabilities  of  changes in tax rates will
                                      be  recognized as income or expense in the
                                      period that includes the  enactment  date.
                                      The Company files a  consolidated  Federal
                                      income tax return with its subsidiaries.

LONG-LIVED ASSETS                     Long-lived  assets,  such as goodwill  and
                                      property and equipment,  are evaluated for
                                      impairment   when  events  or  changes  in
                                      circumstances  indicate  that the carrying
                                      amount   of   the   assets   may   not  be
                                      recoverable    through    the    estimated
                                      undiscounted  future  cash  flows from the
                                      use  of  these   assets.   When  any  such
                                      impairment exists, the related assets will
                                      be written down to fair value.


                                      F-12

<PAGE>

                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES

                                                  SUMMARY OF ACCOUNTING POLICIES

================================================================================

RECLASSIFICATIONS                     Certain  reclassifications  have been made
                                      in prior years'  financial  statements  to
                                      conform  to  classifications  used  in the
                                      current year.

NEW ACCOUNTING                        In June  2001,  the  Financial  Accounting
PRONOUNCEMENTS                        Standards   Board   finalized   the   FASB
                                      Statements No. 141, Business  Combinations
                                      (SFAS  141),  and No.  142,  Goodwill  and
                                      Other  Intangible  Assets (SFAS 142). SFAS
                                      141  requires  the  use  of  the  purchase
                                      method of accounting and prohibits the use
                                      of  the  pooling-of-interests   method  of
                                      accounting   for   business   combinations
                                      initiated  after June 30,  2001.  SFAS 141
                                      also requires  that the Company  recognize
                                      acquired   intangible  assets  apart  from
                                      goodwill if the acquired intangible assets
                                      meet certain criteria. SFAS 141 applies to
                                      all business combinations  initiated after
                                      June 30,  2001 and for  purchase  business
                                      combinations completed on or after July 1,
                                      2001. It also  requires,  upon adoption of
                                      SFAS 142, that the Company  reclassify the
                                      carrying amounts of intangible  assets and
                                      goodwill  based  on the  criteria  in SFAS
                                      141.

                                      SFAS 142  requires,  among  other  things,
                                      that   companies   no   longer    amortize
                                      goodwill,  but instead  test  goodwill for
                                      impairment at least annually. In addition,
                                      SFAS  142   requires   that  the   Company
                                      identify  reporting units for the purposes
                                      of assessing  potential future impairments
                                      of goodwill,  reassess the useful lives of
                                      other   existing   recognized   intangible
                                      assets,    and   cease   amortization   of
                                      intangible   assets  with  an   indefinite
                                      useful life. An  intangible  asset with an
                                      indefinite  useful  life  should be tested
                                      for  impairment  in  accordance  with  the
                                      guidance in SFAS 142. SFAS 142 is required
                                      to be  applied in fiscal  years  beginning
                                      after  December  15, 2001 to all  goodwill
                                      and other intangible  assets recognized at
                                      that date, regardless of when those assets
                                      were   initially   recognized.   SFAS  142
                                      requires   the   Company  to   complete  a
                                      transitional  goodwill impairment test six
                                      months  from  the  date of  adoption.  The
                                      Company is also  required to reassess  the
                                      useful  lives of other  intangible  assets
                                      within  the first  interim  quarter  after
                                      adoption of SFAS 142.


                                      F-13

<PAGE>

                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES

                                                  SUMMARY OF ACCOUNTING POLICIES

================================================================================

                                      The    Company's     previous     business
                                      combinations  were accounted for using the
                                      purchase method.  As of July 31, 2001, the
                                      net   carrying   amount  of   goodwill  is
                                      $7,166,000 and other intangible  assets is
                                      $1,817,000.  Amortization  expense  during
                                      the year ended July 31, 2001 was $956,000.
                                      Currently the Company is assessing but has
                                      not yet  determined  how the  adoption  of
                                      SFAS  141 and SFAS  142  will  impact  its
                                      financial    position   and   results   of
                                      operations.


                                      F-14

<PAGE>

                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES

                                                   NOTES TO FINANCIAL STATEMENTS

================================================================================

<TABLE>
<CAPTION>

<S>         <C>                      <C>                                             <C>                 <C>

1.          FURNITURE,               Furniture,  equipment  and  leasehold  improvements  are stated at cost and are
            EQUIPMENT AND            summarized as follows:
            LEASEHOLD
            IMPROVEMENTS

                                     JULY 31,                                              2001                2000
                                     ------------------------------------------------------------------------------
                                     Furniture and equipment                         $1,776,000          $1,539,000
                                     Leasehold improvements                             369,000             212,000
                                     ------------------------------------------------------------------------------
                                                                                      2,145,000           1,751,000
                                     Less accumulated depreciation and
                                       amortization                                   1,206,000             991,000
                                     ------------------------------------------------------------------------------
                                                                                     $  939,000          $  760,000
                                     ==============================================================================

2.          EXCESS OF COST OVER      Changes in the excess of cost over fair  value of net  assets  acquired  during
            FAIR VALUE OF NET        the two years ended July 31, 2001 and 2000 are as follows:
            ASSETS ACQUIRED

                                     JULY 31,                                              2001                2000
                                     ------------------------------------------------------------------------------
                                     Balance, beginning of year                      $6,945,000          $5,334,000
                                     Additions                                          722,000           1,978,000
                                     Amortization for year                             (501,000)           (367,000)
                                     ------------------------------------------------------------------------------
                                     Balance, end of year                            $7,166,000          $6,945,000
                                     ==============================================================================

3.          OTHER INTANGIBLE         Other intangible assets are as follows:
            ASSETS

                                     JULY 31,                                              2001                2000
                                     ------------------------------------------------------------------------------
                                     Covenants not to compete                        $1,275,000          $  975,000
                                     Personnel files                                  1,519,000           1,119,000
                                     Patient files                                    1,192,000             792,000
                                     ------------------------------------------------------------------------------
                                                                                      3,986,000           2,886,000
                                     Less accumulated amortization                    2,169,000           1,629,000
                                     ------------------------------------------------------------------------------
                                     Balance, end of year                            $1,817,000          $1,257,000
                                     ==============================================================================

                                     Other intangible assets are being amortized using the straight-line
                                     method over a period of three to ten years.
</TABLE>


                                                                F-15

<PAGE>

                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES

                                                   NOTES TO FINANCIAL STATEMENTS

================================================================================

<TABLE>
<CAPTION>

4.          ACCOUNTS PAYABLE
            AND ACCRUED              Accounts payable and accrued expenses are as follows:
            EXPENSES

                                     JULY 31,                                              2001                2000
                                     ------------------------------------------------------------------------------
                                     <S>                                            <C>                 <C>
                                     Trade accounts payable                         $   857,000         $   276,000
                                     Employee compensation and
                                       benefits                                       2,070,000           1,826,000
                                     Other                                              341,000             101,000
                                     ------------------------------------------------------------------------------
                                                                                    $ 3,268,000         $ 2,203,000
                                     ==============================================================================

</TABLE>

5.          INVESTMENT IN             During  fiscal 1996,  following an initial
            SUNSTAR                   public  offering and change in management,
            HEALTHCARE, INC.          the  Company  held a 37.6%  investment  in
                                      SunStar  Healthcare,   Inc.   ("SunStar"),
                                      which was  accounted  for under the equity
                                      method of accounting.

                                      In fiscal 1998,  the  Company's  ownership
                                      percentage of SunStar was reduced to 30.5%
                                      as a result of SunStar issuing  additional
                                      shares of its common  stock  pursuant to a
                                      private  placement  in which  it  received
                                      $1,318,000, net of expenses. In connection
                                      therewith,  the  Company  recorded  a gain
                                      before tax of  $302,000  representing  the
                                      net   increase   in  book   value  of  the
                                      Company's investment. Also in fiscal 1998,
                                      the Company sold 10,000  shares of SunStar
                                      for  $37,000   and   recorded  a  gain  of
                                      $29,000.

                                      During  the  fiscal  year  ended  July 31,
                                      2000,  the Company sold 259,510  shares of
                                      SunStar  for  $1,602,000,  resulting  in a
                                      gain of $1,602,000.

                                      In February 2000, SunStar's sole operating
                                      subsidiary    effectively     discontinued
                                      operations.  As  of  July  31,  2001,  the
                                      Company's ownership  percentage of SunStar
                                      was 21.6% and the Company's value  of  its
                                      investment in SunStar is $0.


                                      F-16

<PAGE>

                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES

                                                   NOTES TO FINANCIAL STATEMENTS

================================================================================

6.          ACQUISITIONS
                                      On November 1, 1999, the Company  acquired
                                      certain assets of Optimum Care Services of
                                      Connecticut  Inc.,  Optimum Home Health of
                                      Connecticut, Inc. and Optimum Home Care of
                                      Connecticut, Inc. The assets were acquired
                                      from a  court-appointed  Chapter 7 Trustee
                                      for a  purchase  price  of  $4,490,000  in
                                      cash,   including   acquisition  costs  of
                                      $90,000.  The  final  purchase  price  was
                                      determined   through  an  auction  process
                                      conducted at the United States  Bankruptcy
                                      Court for the  District of  Massachusetts.
                                      The assets acquired included certain,  but
                                      not all, machinery, equipment, intangibles
                                      and accounts  receivable and was allocated
                                      as   follows:   $2,307,000   to   accounts
                                      receivable,   $205,000  to  furniture  and
                                      equipment and $1,978,000 to excess of cost
                                      over fair value of net assets acquired.

                                      On April 14,  2000,  the Company  acquired
                                      certain assets of  Connecticut  operations
                                      of U.S.  Home Care Corp.  for  $311,000 in
                                      cash,   including   acquisition  costs  of
                                      $11,000. The assets purchased consisted of
                                      patient  files of  $156,000  and  employee
                                      files of $155,000.

                                      On August 25, 2000,  the Company  acquired
                                      certain assets of Health Force Owned, Ltd.
                                      and its affiliates for $1,822,000 in cash,
                                      including  acquisition  costs of  $42,000.
                                      The assets purchased consisted of patients
                                      files  of  $400,000,   employee  files  of
                                      $400,000,   covenant  not  to  compete  of
                                      $300,000  and  excess  of cost  over  fair
                                      value of net assets acquired of $722,000.

                                      On August 10, 1998,  the Company  acquired
                                      certain assets of Bryan Employment Agency,
                                      Inc.,   d/b/a   Bryan   Home   Care,   for
                                      approximately    $1,943,000,     including
                                      acquisition  costs of  $8,000.  The assets
                                      purchased  consisted of personnel files of
                                      $285,000,   patient   files  of  $285,000,
                                      furniture  and  equipment  of  $30,000,  a
                                      covenant  not to compete of  $200,000  and
                                      excess  of cost  over  fair  value  of net
                                      assets acquired of $1,143,000.


                                      F-17

<PAGE>

                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES

                                                   NOTES TO FINANCIAL STATEMENTS

================================================================================

6.          ACQUISITIONS              On October 30, 1998, the Company  acquired
            (CONTINUED)               all of the  outstanding  common  shares of
                                      Accredited    Health    Services,     Inc.
                                      ("Accredited").  Accredited  is a licensed
                                      home health  care  company  that  provides
                                      home  health  aide   services  in  various
                                      counties  in New Jersey.  The  purchase of
                                      $1,946,000  was  generated  from  internal
                                      funds.  The  acquisition was accounted for
                                      as a  purchase.  The  purchase  price  was
                                      allocated as follows:  $1,117,000 to total
                                      current  assets,  $58,000 to furniture and
                                      equipment,   $40,000   to  other   assets,
                                      $550,000  to  total  current  liabilities,
                                      $4,000 to other  liabilities and excess of
                                      cost  over  fair   value  of  net   assets
                                      acquired of $1,285,000.

                                      The above  acquisitions have been recorded
                                      using  purchase   accounting   principles.
                                      Accordingly,    the   results   of   these
                                      operations   have  been  included  in  the
                                      accompanying     consolidated    financial
                                      statements since the dates of acquisition.

                                      The   following    unaudited   pro   forma
                                      consolidated results of operations for the
                                      year  ended  July  31,  1999  assumes  the
                                      business   acquisitions   occurred  as  of
                                      August 1, 1998:

                                      July 31,                              1999
                                      ------------------------------------------
                                      Revenues, net                 $ 39,849,000
                                      Net income                       1,181,000
                                      ==========================================
                                      Net income per common share:
                                        Basic                       $        .22
                                        Diluted                     $        .22
                                      ==========================================

                                      The effects of the above  acquisitions  on
                                      the 2001 and 2000 consolidated  results of
                                      operations were not significant.

7.          INCOME TAXES              The  Company  files  a  consolidated  U.S.
                                      federal  income  tax  return.   State  tax
                                      returns   are  filed  on  a  combined   or
                                      separate basis depending on the applicable
                                      laws.


                                      F-18

<PAGE>

                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES

                                                   NOTES TO FINANCIAL STATEMENTS

================================================================================

7.          INCOME TAXES              The    provision   for   income  taxes  is
            (CONTINUED)               summarized as follows:

<TABLE>
<CAPTION>

                                      Years ended July 31,                  2001            2000            1999
                                      --------------------------------------------------------------------------------
                                      <S>                                <C>            <C>            <C>
                                      Current:
                                        Federal                          $2,275,000     $1,504,000     $   718,000
                                        State                               735,000        641,000         283,000
                                      --------------------------------------------------------------------------------
                                                                          3,010,000      2,145,000       1,001,000
                                      Deferred                             (306,000)       (87,000)              -
                                      --------------------------------------------------------------------------------
                                                                         $2,704,000     $2,058,000     $ 1,001,000
                                      ================================================================================

</TABLE>

                                      Deferred  income  taxes  reflect  the  tax
                                      impact of  temporary  differences  between
                                      the amounts of assets and  liabilities for
                                      financial   reporting  purposes  and  such
                                      amounts as measured by tax regulations.

                                      The deferred tax asset is as follows:
<TABLE>
<CAPTION>

                                      Years ended July 31,                       2001           2000
                                      --------------------------------------------------------------
                                      <S>                                    <C>           <C>
                                      Accrued liabilities and reserves       $510,000      $ 248,000
                                      Amortization of intangible
                                       assets                                 288,000        210,000
                                      State net operating loss
                                       carryforwards                           12,000         46,000
                                      --------------------------------------------------------------
                                                                             $810,000       $504,000
                                      ==============================================================

</TABLE>


                                      F-19

<PAGE>

                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES

                                                   NOTES TO FINANCIAL STATEMENTS

================================================================================

7.          INCOME TAXES              The  reconciliation  of the  statutory tax
            (CONTINUED)               rate to the  effective  tax  rate  for the
                                      three  years  ended  July  31,  2001 is as
                                      follows:

<TABLE>
<CAPTION>

                                      Years ended July 31,                           2001          2000        1999
                                      --------------------------------------------------------------------------------
                                      <S>                                             <C>            <C>           <C>
                                      Statutory rate                                  34%            34%           34%
                                      State and local taxes
                                         (net of federal tax effect)                   6             10            11
                                      Federal tax credit                              (2)            (2)           (4)
                                      Permanent differences                            1              1             8
                                      Change in valuation allowance                    -             (5)            -
                                      Adjustments to prior years tax
                                        liabilities                                    -             (2)            -
                                      Other                                            -             (3)           (2)
                                      --------------------------------------------------------------------------------
                                      Effective rate                                  39%            33%           47%
                                      ================================================================================

</TABLE>

8.          CONCENTRATIONS OF         The Company's  business is with  customers
            CREDIT RISK AND           who are in the healthcare industry or with
            MAJOR CUSTOMERS           governmental agencies.

                                      The Company provides temporary health care
                                      personnel   to   in-home    patients   and
                                      facilities    in   the   New   York   City
                                      metropolitan    area,    the    State   of
                                      Connecticut  and the State of New  Jersey.
                                      Credit   losses   relating  to   customers
                                      historically  have been minimal and within
                                      management's expectations.

                                      At July 31,  2001,  the Company  maintains
                                      approximately  39% of its  cash  and  cash
                                      equivalents     with     one     financial
                                      institution.

                                      Under    certain    federal    and   state
                                      third-party  reimbursement  programs,  the
                                      Company  received net patient  revenues of
                                      approximately $37,788,000, $19,955,000 and
                                      $13,281,000  for the years  ended July 31,
                                      2001,  2000 and  1999,  respectively.  The
                                      Company also received net patient revenues
                                      of  approximately  $4,610,000,  $5,663,000
                                      and  $6,095,000  for the years  ended July
                                      31,  2001,  2000 and  1999,  respectively,
                                      from a private company.  At July 31, 2001,
                                      the Company had an  aggregate  outstanding
                                      receivable from federal and state agencies
                                      of   $5,058,000    and   an    outstanding
                                      receivable of $1,142,000  from the private
                                      company.


                                      F-20

<PAGE>

                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES

                                                   NOTES TO FINANCIAL STATEMENTS

================================================================================

9.          STOCK OPTION PLAN         In 1999,  the  stockholders  approved  the
                                      1999 Stock  Option Plan (the "1999  Plan")
                                      designed  to  provide  incentives  to  key
                                      employees    (including    directors   and
                                      officers  who  are key  employees)  and to
                                      non-employee directors of the Company. The
                                      1999 Plan  authorizes the granting of both
                                      incentive and non-qualified  stock options
                                      to  purchase  up to 525,000  shares of the
                                      Company's common stock.

                                      At July 31,  2001,  515,600  shares of the
                                      Company's  common stock have been reserved
                                      for future  issuance  pursuant to the 1999
                                      Plan.

                                      The Company  has a Stock  Option Plan (the
                                      "1992    Plan")    designed   to   provide
                                      incentives  to  key  employees  (including
                                      directors   and   officers   who  are  key
                                      employees) and to  non-employee  Directors
                                      of the Company.  The 1992 Plan  authorizes
                                      the   granting  of  both   incentive   and
                                      nonqualified  stock options to purchase up
                                      to 500,000 shares of the Company's  common
                                      stock.

                                      At July 31,  2001,  433,350  shares of the
                                      Company's  common stock have been reserved
                                      for future  issuance  pursuant to the 1992
                                      Plan.

                                      The  following  is a summary of the status
                                      of the Company's stock options.

<TABLE>
<CAPTION>

                                     2001                       2000                         1999
                            ------------------------  -------------------------   ---------------------------
                               Weighted Average           Weighted Average             Weighted Average
                            ------------------------  -------------------------   ---------------------------
                                   Exercise                   Exercise                     Exercise
                            ------------------------  -------------------------   ---------------------------
                              Shares       Price         Shares       Price         Shares        Price
-------------------------------------------------------------------------------------------------------------
<S>                             <C>        <C>             <C>           <C>         <C>               <C>
Outstanding, beginning of
   year                         500,277    $   4.06        272,534       $3.98        253,846          $3.13
Granted                               -           -        258,300        4.15        189,947           3.73
Exercised                       (16,500)       4.17              -           -              -              -
Forfeited                             -           -        (30,557)       4.09      (171,259)           2.44
                            ------------              -------------               ------------
Outstanding, end of year        483,777        4.05        500,277        4.06       272,534            3.98
                                           --------                    --------                       -------

Options exercisable at
   year-end                     483,777        4.05        500,277        4.06       272,534            3.98
                            ------------              -------------               ------------

Weighted average fair
   value of options
   granted during the year                 $      -                      $2.36                         $1.87
                                           --------                    --------                       -------

</TABLE>


                                      F-21

<PAGE>

                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES

                                                   NOTES TO FINANCIAL STATEMENTS

================================================================================

9.          STOCK OPTION PLAN         The following table summarizes information
            (CONTINUED)               about stock  options  outstanding  at July
                                      31, 2001:
<TABLE>
<CAPTION>

                                                            Options Outstanding and Exercisable
                                      ---------------------------------------------------------------------------------
                                                                                      Weighted
                                                                  Shares               Average             Weighted
                                                              Outstanding at         Remaining             Average
                                                               July 31, 2001      Contractual Life      Exercise Price
                                      ---------------------------------------    -----------------    -----------------
                                      <S>                        <C>                <C>                    <C>

                                      $3.45 - $3.79              159,497            7.75 years             $3.62
                                      $3.86 - $4.04              165,950            8.19 years             $4.02
                                      $4.33 - $4.57              151,450            7.47 years             $4.49
                                      $5.42                        6,880            4.71 years             $5.42
                                      =================================================================================
</TABLE>

                                      The fair value of options at date of grant
                                      was  estimated  using  the   Black-Scholes
                                      option   pricing   model   utilizing   the
                                      following  assumptions as of July 31, 2000
                                      and 1999:

<TABLE>
<CAPTION>

                                      Years ended July 31,                  2000            1999
                                      ----------------------------------------------------------------
                                      <S>                               <C>              <C>
                                      Dividend yield                        0.00%            0.00%
                                      Volatility                           35.00%           33.00%
                                      Risk-free interest rate               6.20%            5.50%
                                      Expected life                     10 years         10 years
                                      ================================================================

</TABLE>

                                      The  Black-Scholes  option valuation model
                                      was developed  for use in  estimating  the
                                      fair value of traded options which have no
                                      vesting   restrictions   and   are   fully
                                      transferable.    In    addition,    option
                                      valuation  models  require  the  input  of
                                      highly  subjective  assumptions  including
                                      the  expected   stock  price   volatility.
                                      Because the  Company's  stock options have
                                      characteristics   significantly  different
                                      from those of traded options,  and because
                                      changes    in   the    subjective    input
                                      assumptions can materially affect the fair
                                      value estimate,  in management's  opinion,
                                      the  existing  models  do not  necessarily
                                      provide a reliable  single  measure of the
                                      fair value of its stock options.


                                      F-22

<PAGE>

                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES

                                                   NOTES TO FINANCIAL STATEMENTS

================================================================================

9.          STOCK OPTION PLAN         Since   the Company applies APB Opinion 25
            (CONTINUED)               and related  interpretations in accounting
                                      for its options,  no compensation cost has
                                      been   recognized  for  its  stock  option
                                      grants.  The effect of  applying  SFAS No.
                                      123  on  pro  forma  net   income  is  not
                                      necessarily  representative of the effects
                                      on  reported  net income for future  years
                                      due  to,  among  other  things,   (1)  the
                                      vesting  period of stock  options  and (2)
                                      the fair value of additional stock options
                                      in future years.  Had the Company  elected
                                      to  recognize  compensation  cost based on
                                      the fair value of the  options at the date
                                      of grant as  prescribed  by SFAS 123,  net
                                      income for the years  ended July 31,  2000
                                      and 1999 would have been as follows:

<TABLE>
<CAPTION>

                                      Years ended July 31,                       2000          1999
                                      -----------------------------------------------------------------
                                      <S>                                    <C>           <C>
                                      Proforma net income                    $3,843,000    $1,085,000
                                      Proforma net income per common share:
                                            Basic                            $      .76    $      .18
                                            Diluted                          $      .76    $      .17
                                      =================================================================

</TABLE>

10.         COMMITMENTS,          a)  Effective  January  1, 1999,  the  Company
            CONTINGENCIES AND         amended and restated its Employee  Savings
            OTHER MATTERS             and Stock  Investment Plan organized under
                                      Section  401(k)  of the  Internal  Revenue
                                      Code.  Under the amended  plan,  employees
                                      may  contribute up to 15% of their salary,
                                      limited to the  maximum  amount  allowable
                                      under federal tax regulations. The Company
                                      will match an amount  equal to 100% of the
                                      first 3% of employees'  contributions  and
                                      50%  of   the   next   2%  of   employees'
                                      contributions,  provided  that in no event
                                      shall the matching contributions on behalf
                                      of any  employee  exceed 4% of  employees'
                                      compensation.  The  Company  may also make
                                      additional     contributions     at    its
                                      discretion.  An  employee  may  invest  in
                                      Company  stock and several  mutual  funds.
                                      The Company's  matching  contributions for
                                      each of the  years  ended  July 31,  2001,
                                      2000 and 1999 were $495,000, $226,000, and
                                      $143,000, respectively.


                                      F-23

<PAGE>

                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES

                                                   NOTES TO FINANCIAL STATEMENTS

================================================================================

10.         COMMITMENTS,          b)  The  Company  has  employment   agreements
            CONTINGENCIES AND         with five officers, which 10. Commitments,
            OTHER MATTERS             expire  through  November  30,  2003.  The
                                      aggregate commitment for Contingencies and
                                      Other future  salary,  excluding  bonuses,
                                      under   the    agreements    is    Matters
                                      $1,655,000.  One  agreement  also provides
                                      for  increases  based on  increases in the
                                      consumer price index and additional annual
                                      compensation   based  on  4%  of   pre-tax
                                      income,   as   defined,   in   excess   of
                                      $3,000,000.  Two other agreements  provide
                                      for  additional  compensation  based on 4%
                                      and  1%  of  income  from  operations,  as
                                      defined,  in excess of $3,300,000.

                                  c)  The   Company   rents    various    office
                                      facilities through 2006 under the terms of
                                      several  lease   agreements  that  include
                                      escalation clauses.

                                      At July 31, 2001,  minimum  annual  rental
                                      commitments under noncancellable operating
                                      leases are as follows:

                                      Years ended July 31,
                                      --------------------------------------
                                      2002                     $   774,000
                                      2003                         598,000
                                      2004                         391,000
                                      2005                         340,000
                                      2006                          12,000
                                      --------------------------------------
                                                                $2,115,000
                                      ======================================

                                      Rent  expense for the years ended July 31,
                                      2001,  2000  and  1999  was  approximately
                                      $858,000,    $636,000,    and    $594,000,
                                      respectively.

                                      One lease is with a company  controlled by
                                      the Company's  Chairman of the Board. Rent
                                      expense  under  such  lease   approximates
                                      $226,000 per year.


                                      F-24

<PAGE>

                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES

                                                   NOTES TO FINANCIAL STATEMENTS

================================================================================

10.         COMMITMENTS,          d)  The Company  and  certain of its  officers
            CONTINGENCIES AND         and   directors   have   been   named   as
            OTHER MATTERS             defendants in a consolidated  class action
            (CONTINUED)               brought on behalf of certain  shareholders
                                      of SunStar Healthcare,  Inc.  ("SunStar").
                                      The  lawsuit   asserts   alleged  acts  or
                                      omissions,      which      resulted     in
                                      misrepresentations    or    omissions   of
                                      material   information    concerning   the
                                      financial   condition   of   SunStar.   In
                                      February  2001,  the Court  dismissed  the
                                      complaint and granted the Plaintiffs leave
                                      to amend. In addition, the lawsuit alleges
                                      that the  Company  and  certain  directors
                                      exercised control over SunStar. In October
                                      2001,  the Court  granted the  defendants'
                                      motion  to  dismiss  the  Complaint   with
                                      prejudice.  The Company is not aware as to
                                      whether the Plaintiffs will exercise their
                                      right to appeal this decision.

                                      In  a   related   action,   the   director
                                      defendants  are named in a case brought by
                                      the  Department  of Insurance of the State
                                      of Florida. The allegations in this action
                                      are similar to those  alleged in the class
                                      action  lawsuit,  which  was  subsequently
                                      dismissed.  Although  the  Company  is not
                                      named in this action,  the Company intends
                                      to indemnify  the director  defendants  to
                                      the  fullest  extent  permitted  under its
                                      by-laws. On May 7, 2001, the Court granted
                                      the director defendants' motion to dismiss
                                      and granted the plaintiff leave to serve a
                                      further  amended  complaint.  On July  24,
                                      2001,  the  plaintiff  served  an  amended
                                      complaint.   On  September  24,  2001  the
                                      director  defendants  filed  a  motion  to
                                      dismiss   the   amended   complaint.   The
                                      defendants have not received a response to
                                      their motion to dismiss.  The  defendants'
                                      believe  that the  complaints  are without
                                      merit  and  intend  to  vigorously  defend
                                      them. At this time, any possible liability
                                      to the Company cannot be determined.


                                      F-25

<PAGE>

                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES

                                                   NOTES TO FINANCIAL STATEMENTS

================================================================================

11.         STOCK DIVIDEND            The Board  announced on March 13, 2001 the
                                      declaration of a 5% stock dividend payable
                                      on  March  23,  2001  to  shareholders  of
                                      record  on March 16,  2001.  The basic and
                                      diluted  weighted average number of shares
                                      outstanding   and  net  income  per  share
                                      information   for  all   prior   reporting
                                      periods have been  restated to reflect the
                                      effects of the stock dividend.

12.         SUMMARIZED                Presented   below  is  a  summary  of  the
            QUARTERLY DATA            unaudited consolidated quarterly financial
            (UNAUDITED)               information  for the years  ended July 31,
                                      2001 and 2000 (in  thousands,  except  per
                                      share data):

<TABLE>
<CAPTION>

                                                                                           2001
                                      ---------------------------------------------------------------------------------
                                      Quarter                         First       Second        Third        Fourth
                                      ---------------------------------------------------------------------------------
                                      <S>                              <C>          <C>           <C>          <C>
                                      Net patient revenue              $17,518      $18,479       $18,944      $19,551
                                      Income from
                                       operations                        1,484        1,632         1,741        1,831
                                      Net income                           872          959         1,065        1,304
                                      Net income per
                                       common share:
                                        Basic                              .17          .19           .21          .25
                                        Diluted                            .16          .18           .20          .24
                                      =================================================================================

<CAPTION>

                                                                                           2000
                                     ----------------------------------------------------------------------------------
                                     Quarter                           First       Second        Third        Fourth
                                     ----------------------------------------------------------------------------------
                                     <S>                               <C>         <C>           <C>          <C>
                                     Net patient revenue               $9,494      $15,041       $15,245      $15,794
                                     Income from operations               631        1,303         1,334        1,059
                                     Gain resulting from sale
                                       of stock of equity
                                       investee (a)                       943          659             -            -
                                     Net income                         1,091        1,459           776          765
                                     Net income per common share
                                        Basic                             .20          .28           .15          .15
                                        Diluted                           .20          .27           .15          .15
                                      =================================================================================

                                      (a) The Company sold 259,510 shares of SunStar resulting in a financial
                                      statement gain of $1,602,000.

</TABLE>


                                      F-26

<PAGE>

                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES

                                                   NOTES TO FINANCIAL STATEMENTS

================================================================================

13.         EVENT SUBSEQUENT          On October 24, 2001, the Company closed on
            TO AUDITORS'              a new  revolving  line of credit  facility
            OPINION                   ("credit  facility")  with its  bank.  The
                                      credit  facility  provides for the Company
                                      to borrow up to the  lesser of  $7,500,000
                                      or 80%  of  eligible  accounts  receivable
                                      that  are aged  less  than 120 days at the
                                      banks  prime rate or LIBOR plus 2.5%.  The
                                      credit  facility  expires on  October  23,
                                      2003  and  requires  the  Company  to meet
                                      certain financial covenants and ratios.


                                      F-27

<PAGE>

                             SUPPLEMENTAL MATERIAL


================================================================================

<PAGE>

Independent Auditors' Report
  on Supplemental Material


The audit referred to in our report dated September 28, 2001 on the consolidated
financial statements of National Home Health Care Corp. and Subsidiaries,  which
appears in Part II, also included  Schedule II for the year ended July 31, 2001.
This  schedule  is  the   responsibility  of  the  Company's   management.   Our
responsibility is to express an opinion based on our audit. In our opinion,  the
financial  statement  schedule referred to above, when considered in relation to
the basic financial statements taken as a whole, presents fairly in all material
respects the  information  set forth therein,  in compliance with the applicable
accounting regulations of the Securities and Exchange Commission.


/s/ BDO Seidman, LLP
--------------------
BDO Seidman, LLP
Valhalla, New York
September 28, 2001


                                      F-29

<PAGE>

                    INDEPENDENT AUDITORS' REPORT ON SCHEDULE
                    ----------------------------------------


The audits  referred to in our report dated October 3, 2000 on the  consolidated
financial statements of National Home Health Care Corp. and Subsidiaries,  which
appears in Part II, also included  Schedule II for the years ended July 31, 2000
and 1999. This schedule is the responsibility of the Company's  management.  Our
responsibility is to express an opinion based on our audit. In our opinion,  the
financial  statement  schedule referred to above, when considered in relation to
the basic financial statements taken as a whole, presents fairly in all material
respects the  information  set forth therein,  in compliance with the applicable
accounting regulations of the Securities and Exchange Commission.


/s/ Holtz Rubenstein & Co., LLP
-------------------------------
Holtz Rubenstein & Co., LLP
Melville, New York

October 3, 2000


                                      F-30

<PAGE>

<TABLE>
<CAPTION>
                   Column A                   Column B                  Column C                 Column D       Column E
------------------------------------------------------------------------------------------------------------------------------------
                                                                      Additions
                                                          ----------------------------------
                     Description              Balance,        Charged to         Charged to
                                              beginning       costs and          other accounts        Deductions       Balance,
                                              of period       expenses           describe              describe      end of period
------------------------------------------------------------------------------------------------------------------------------------
<S>                                            <C>              <C>              <C>                   <C>                <C>
Year ended July 31, 2001:
 Allowance deducted from asset account
 Allowance for doubtful accounts               $673,000         $670,000         $        -            $478,000(a)        $865,000
------------------------------------------------------------------------------------------------------------------------------------
Year ended July 31, 2000:
 Allowance deducted from asset account
 Allowance for doubtful accounts               $392,000         $595,000         $        -            $314,000(a)        $673,000
------------------------------------------------------------------------------------------------------------------------------------
Year ended July 31, 1999:
 Allowance deducted from asset account
 Allowance for doubtful accounts               $295,000         $      -         $196,500 (b)          $ 99,500(a)        $392,000
====================================================================================================================================
                                                                        SEE ACCOMPANYING INDEPENDENT ACCOUNTANTS' COMPILATION REPORT
                                                                                      AND NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

</TABLE>

(a)  REPRESENTS  ACTUAL  WRITE-OFFS.
(b)  REPRESENTS ALLOWANCE ACQUIRED IN ACQUISITION OF ACCREDITED HEALTH SERVICES,
     INC.


                                      F-31

<PAGE>


(3)  EXHIBITS

     EXHIBIT
     NUMBER               DOCUMENT
     ------               --------

      23.1*               CONSENT OF HOLTZ RUBENSTEIN & CO., LP
      23.2*               CONSENT OF BDO SEIDMAN, LLP

----------
*     FILED HEREWITH


<PAGE>

                                   SIGNATURES
                                   ----------

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, as amended,  the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

                              NATIONAL HOME HEALTH CARE CORP.

                              By: /s/ Robert P. Heller
                                  ------------------------------------
                                  Robert P. Heller
                                  Vice President of Finance and
                                  Chief Financial Officer

Dated:  September 19, 2002





<PAGE>


                                                    COMMISSION FILED NO. 0-12927



                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    EXHIBITS

                                       to

                                   FORM 10-K/A
                               AMENDMENT NO. 1 TO
                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
           OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, FOR THE
                         FISCAL YEAR ENDED JULY 31, 2001


                         NATIONAL HOME HEALTH CARE CORP.








<PAGE>


     EXHIBIT
     NUMBER               DOCUMENT
     ------               --------

      23.1*               CONSENT OF HOLTZ RUBENSTEIN & CO., LP
      23.2*               CONSENT OF BDO SEIDMAN, LLP

----------
*     FILED HEREWITH